A writer for Forbes spells out the question of nuclear investment:
how can something that expensive, over-budget, late, and phenomenally
risky be a good investment, especially when cheaper and faster energy
sources are readily available?
Peter Kelly-Detwiler wrote for Forbes today,
New Centralized Nuclear Plants: Still an Investment Worth Making?
Just a few years ago, the US nuclear renaissance seemed at hand. It
probably shouldn’t have been. Cost overruns from Finland to France
to the US were already becoming manifest, government guarantees were
in doubt, and shale gas drillers were beginning to punch holes into
the ground with abandon.Then came Fukushima. The latter proved a somewhat astonishing
reminder of forgotten lessons about nuclear power risks, unique to
that technology: A failure of one power plant in an isolated
location can create a contagion in countries far away, and even
where somewhat different variants of that technology are in use.
Just as Three Mile Island put the kaibosh on nuclear power in the US
for decades, Fukushima appears to have done the same for Japan and
Germany, at a minimum. It certainly did not help public opinion, and
at a minimum, the effect of Fukushima will likely be to increase
permitting and associated regulatory costs.
He goes into detail: they take too long (while gas and solar got cheaper),
they’re extremely expensive to build and run, and they’re all-or-nothing
investments.
I was going to compile this list of recent nuclear financial failures,
but he saves us all the trouble:
Electricite de France’s Flamanville plant has
seen its budget explode from 3.3 to 6 bn (July 2011)
to 8
bn Euros ($10.5 bn) as of last December, with a delay of
four years over original targets. EDF in part blames stricter
post-Fukushima regulations for part of the overrun). To the
north, Finland’s Olkiluoto – being constructed by Areva – has
seen delays of nearly five years, and enormous cost overruns. The
original turnkey cost of 3.0 bn Euros has skyrocketed beyond all fears,
increasing at least 250%. Just last month, Areva’s CEO conceded “We
estimate that the costs of Olkiluoto are near those of Flamanville.”
In the US, recent experience doesn’t look much better:
Progress Energy (now Duke) first announced the 2,200 MW Levy
nuclear project in 2006, with an estimated price tag of $4 to $6 bn
and an online date of 2016. The cost estimated increased to $17
bn in 2008. This year, Progress announced the project would cost
$24 billion
and come online in 2024. The Levy plant currently has a
debt in excess of $1.1 bn for which customers had already paid $545
million through 2011. As of now, the utility plans to proceed,
with the Executive VP for Power Generation stating ”We’ve
made a decision to build Levy… I’m confident in the schedule and
numbers.”In Georgia, Vogtle Units 3 and 4 (owned jointly by a number
of utilities, including Georgia Power) appear in somewhat better
shape, but issues have cropped up there as well. Customers
currently pay $10 per month in advance to cover financing
associated with the two 1,117 MW units. Georgia Power is allowed
by legislation to recover $1.7
bn in financing costs of its estimated $6.1 bn portion of the $14 bn
plant during the construction period . However, there have already
been some cost problems, and Georgia
Power is disputing its responsibility to pay $425 million
of overruns resulting from delays in licensing approvals. Total
cost excesses to all partners total $875 mn. The two units were
expected to come online in 2016 and 2017, but in a Georgia PSC
meeting in December, an independent monitor noted that expected
“From 2007 to 2010, the NRC received 18 nuclear applications
( of which only twelve are still active). Of these, the
consulting outfit Analysis Group reported that for eight plants
where they were able to obtain two or more comparable cost estimate,
7 are over budget (including Levy and Vogtle), with updated numbers
“often double or triple initial estimates.”delays of fifteen months are largely
as a result of poor paperwork related to stringent design rules and
quality assurance. Those delays will likely continue to cost more money.Unfortunately, these experiences are not outliers.
From 2007 to 2010, the NRC received 18 nuclear applications
(of which only twelve are still active). Of these, the
consulting outfit Analysis Group reported that for eight plants
where they were able to obtain two or more comparable cost estimate, 7
are over budget (including Levy and Vogtle), with updated numbers
“often double or triple initial estimates.” This is consistent
with an MIT study estimating ‘overnight’ costs nearly doubling from
2002 to 2007. As utilities management consultant Stephen Maloney was
quoted in the Analysis Group study “No one has ever built a contemporary
reactor to contemporary standards, so no one has the experience to state
with confidence what it will cost. We see cost escalations as companies
coming up the learning curve.”Last August, Exelon abandoned plans to construct
two facilities in Texas, blaming low natural gas prices.
Two months later, Dominion Resources announced that it would shut
down its existing Kewaunee station in Wisconsin as a consequence of
low gas prices and a lack of buyers. The latter move was particularly
eye-opening: building a nuclear plant is supposed to be the expensive
part, while operation is expected to be relatively cheap.
The Forbes writer doesn’t even mention San Onofre or South Texas or Seabrook
(more on those tomorrow).
He ends by comparing the utilities investing in these things to gamblers,
and says ratepayers are often at the table whether they want to or not.
Well, we don’t have to be.
It’s time for an intervention!
The Georgia legislature is in session.
You can contact
your legislator or the PSC today
about
toppling Southern Company’s three-legged nuclear regulatory-capture stool
and
fixing that 1973 Territoriality Law
so we can get on with solar and wind in Georgia,
for jobs and energy independence, for clean air and
plenty of clean
water.
-jsq